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Kefi reduces estimated capital to build its Ethiopian gold mine: KEFI

Kefi Minerals has reduced the estimated funding required to build a mine at its 100%-owned Tulu Kapi gold project, in Ethiopia, from US$145.0 million in the 2015 definitive feasibility study to US$131.7 million, principally through a change in the life-of-mine plan.

With an open pit processing ore by conventional CIL at a revised rate of 1.5 Mt/y (the June 2015 feasibility study targeted a planned production rate of 1.2 Mt/y) the company has reduced the initial capital cost of the mill from US$72.3 million to US$59.7 million. In addition, it has modified the project contracting arrangements, further reducing capital costs by US$10.8 million.

Kefi has also reduced the estimated costs of funding the required capital through a modification of the mix in the proposed funding package. It has increased the proposed senior debt facility from US$65 million to US$85 million and, with confirmation in May this year that the Government of Ethiopia will fund up to US$20 million of infrastructure (specifically the public road and electricity connection) in exchange for an increased share of project equity (additional 20%), the company has secured funding for US$115 million, leaving around US$17 million to be funded.

Originally the thinking was to use a gold-streaming agreement for the bulk of the additional financing (which was around US$45 million until the latest capital reduction estimate) but now the company is considering a much smaller gold-stream facility or a subordinated convertible debt facility.

Kefi anticipates completing financing agreements by the end of Q3 16 with a view to commencing gold production in 2017 at a life-of-mine rate of 100 koz/y.

Kefi reduces estimated capital to build its Ethiopian gold mine: KEFI

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